Amid the intensifying rivalry between global powers, middle-tier countries in the Indo-Pacific region are emerging as focal points for both China and the United States. Despite the escalating competition between superpowers, this region holds significant strategic and economic importance. It boasts impressive economic growth and active participation in global value chains, all while maintaining a relatively neutral stance on international affairs.
One such country caught in this strategic crosscurrent is Bangladesh, located along the resource-rich and strategically vital Bay of Bengal. Its geographical positioning has made it an alluring prospect for various global actors: a key element of the US vision for a free and open Indo-Pacific; a sphere of influence for India; an essential link for China’s engagement with the Global South and its rivalry with India; and a priority recipient of Japan’s development initiatives over the years. Beyond its geostrategic significance, these powers recognize Bangladesh’s economic potential, leading
Bangladesh to skillfully navigate the delicate balance between them.
Amid the global pandemic, Bangladesh emerged as a standout performer in Asia, maintaining growth against the odds. According to the World Bank, its GDP growth rates stood at 3.4 percent in 2020, 6.9 percent in 2021, and an impressive 7.2 percent in 2022.
Bangladesh is on track to transition into a developing country by 2026 and aspires to achieve upper-middle-income status by 2031, followed by high-income status by 2041. With a population of approximately 165 million and a 2022 GDP of US$460 billion, Bangladesh has ascended to the 35th rank among the world’s largest economies, climbing from its previous position at 41st.
However, the trajectory of its GDP growth alone does not encapsulate the full narrative of Bangladesh’s ascent. Faced with mounting pressure to take sides in the midst of escalating power rivalries, Bangladesh has skillfully chosen a neutral path, leveraging its geographical significance to its advantage.
Tug of influence: China vs. Japan
China has significantly augmented its investments in Bangladesh since President Xi Jinping’s visit in 2016. China has been involved in several critical infrastructure projects, including the modernization of Mongla, Bangladesh’s second-largest port, the Karnaphuli tunnel in Chattogram, and the “BNS Sheikh Hasina” submarine base in Pekua. The Chinese ambassador to Bangladesh has expressed the desire to elevate economic relations and cooperation to new heights. However, Bangladesh is far from dependent on China, as Chinese loans comprise only 8 percent of its external debt.
In contrast, Japan has been the driving force behind Bangladesh’s development. Japan recently finalized a funding agreement for the development of Matarbari, Bangladesh’s first deep-sea port. Once operational, this port will establish a vital nexus connecting East Asia, South Asia, and the Middle East. Additionally, this port could offer an alternative to China’s Hambantota port in Sri Lanka.
In a recent visit to Japan, Prime Minister Sheikh Hasina and her counterpart, Prime Minister Kishida, elevated their countries’ relationship to a “strategic partnership”. This demonstrates the extensive collaboration between Japan and Bangladesh in diverse areas, such as ICT, cybersecurity, defense, and agriculture. Japan has also pledged further financial support for Bangladesh’s development.
Interplay with Indian and American interests
The deepening partnership between Japan and Bangladesh resonates with the interests of India and the United States within the strengthening “Quad” alignment. India’s External Affairs Minister, S. Jaishankar, emphasized the comprehensive nature of India’s relationship with Bangladesh, describing it as a 360-degree partnership. This sentiment is supported by their joint efforts in developmental projects such as the Maitree Thermal Power Project, which, coupled with increased bilateral trade, has prompted the shift of transactions from US dollars to rupees and taka to save on exchange rate costs.
While India remains a close ally, Bangladesh’s relationship with the US is more intricate. Despite recognizing Bangladesh’s significance in its Asian strategy, the US has expressed concerns about the perceived erosion of democracy within the country. This was evident in President Joe Biden’s decision not to meet Prime Minister Hasina during her US visit.
Nevertheless, other high-level engagements have exhibited signs of a more pragmatic approach from the US. During the 50th anniversary of US-Bangladesh diplomatic relations, officials in Washington commended Bangladesh’s progress and underscored the need for expanded bilateral trade and technological cooperation.
As the competition among great powers escalates and countries find themselves under pressure to align with either democratic or autocratic blocs, Prime Minister Sheikh Hasina’s policy of strategic equilibrium has proven effective in engaging rival powers. Leveraging its multifaceted foreign policy, Bangladesh’s path forward involves solidifying its status as a sustainable regional economic player. The goal is to create an environment conducive to innovation and investment, thereby attracting support from global powers beyond mere financial aid.